Why E-Commerce In India Is Full Of Potential

‘If you can make it there, you can make it anywhere.’ No, it’s not New York. We’re talking about e-commerce in India. Boasting big numbers and bigger potential, it’s where global brands are investing. Here’s what you need to know.

India is the second-largest online market in the world after China. But they couldn’t be more different.

In China, internet penetration sits at 57%. And because the Great Firewall prevents consumers from accessing global favourites, they use homegrown apps and platforms instead.

There are no such barriers for Indian consumers. The government links digital literacy to economic growth, with another 98 million Indians getting online in 2018. There are now 560 million web users, but internet penetration is only 41%. That’s a huge potential audience.

At the same time, India’s disposable income is rising. 360 million Indians bought something online in 2018 – an 11% annual increase and yet still only a quarter of the population. They also spent 10% more per person than in 2017. With these strong numbers plus the potential for massive growth, it’s no wonder many international brands are adopting an ‘India-first’ model.

But India is not a monolith. There are big differences between urban and rural areas, and even between states. So, how can you make the most of the opportunity on the subcontinent? Here’s our guide to e-commerce in India.

GETTING ONLINE

E-commerce in India is mobile.

Only 26% of mobile customers own smartphones, but that’s still 400 million people. And 97% of Indian internet users access the web on their phone.

Data is cheap too – in 2016, network provider Jio triggered an ongoing price war with six months of free 4G access. It’s currently offering 100 GB of data for 349 INR (around £4).

So clearly your e-commerce store should be built with mobile in mind. Make it responsive, quick to load and Android-compatible. Although Apple’s a trusted brand, its market share is only 2%. Affordability is a key driver, and cheaper brands Xiaomi and Samsung – both operating on Android – are the market leaders.

All that being said, India’s digital infrastructure is still developing. Internet access reaches 85% in urban areas, but coverage is patchy outside towns and cities. In rural areas, internet access can be as low as 16%.

Brands have tried a variety of ways to get around the problem. Netflix introduced downloads for offline viewing and mobile compression. Google launched offline versions of YouTube and Google Maps, as well as adapting its apps for slower connections. Planning around the country’s infrastructure and introducing offline elements could help you maximize your reach.

Due to the lack of infrastructure in rural areas, cash on delivery still makes up more than 50% of online transactions. Offering this option will build trust in your e-commerce store, but don’t overlook Paytm either. It’s the country’s leading digital payments firm with 300 million users.

SPEAK THE LANGUAGE(S)

There are more than 19,500 languages and dialects in India.

Yep, you read that right.

Of these, there are 22 ‘scheduled’ (official) languages. English and Hindi dominate. But the list also includes Marathi, Odia, Telugu and Kannada, each boasting millions of mother-tongue speakers. 44 other languages are being considered for scheduled status. And 121 languages have over 10,000 speakers.

So how on earth do you decide which language to speak to your customers in?

In-depth audience profiling is a good start. It’s also helpful to think on a city-by-city basis. Rather than preparing to launch ‘into India’, approach each city as a new potential market. That way, you can take local languages and demographics into account. After all, what consumers can’t read, they won’t buy.

Not that reading is the be all and end all – voice search is also important in attracting new customers. Growing by 270% last year, many new internet users find it easier than typing. Unsurprisingly, they’re also less likely to search in English.

CITY LIFE

The best place to start is in Tier I cities like New Delhi and Bangalore. They dominate e-commerce in India, with young, affluent internet populations. Think: fluent in English, tech savvy and well travelled. They’re also more likely to be male than female.

The ‘next 100 million’ users are likely to live in Tier II/III cities like Jaipur (3 million inhabitants) and Lucknow (2.8 million). Amazon’s been working with local shopkeepers to drive e-commerce expansion in these areas. The shopkeepers have existing logistics and customer relationships. As part of the Amazon Easy programme, they’re helping these customers make their first online purchases with in-store purchases.

But Amazon faces competition from local rival Flipkart. Like Amazon, it started out as an online bookstore before expanding into other areas. And although Amazon now shifts more products, Flipkart brings in more revenue. It also boasts a 70% customer retention rate. Its recent acquisition by Walmart has given the brand fresh motivation to try to leapfrog Amazon.

Walmart’s acquisition of Flipkart is part of a wider Indian trend. Netflix’s local rival Hotstar offers content in seven regional languages, plus live coverage of popular sports like cricket and kabaddi. It’s now fully owned by Disney. If you can’t beat them – and you’ve got the financial firepower – buy them.

INNOVATION STATIONS

Flipkart and Amazon India are joined by Snapdeal and Paytm Mall as the biggest online marketplaces. Electronics (48%) and apparel (29%) are the biggest product categories.

But e-commerce in India is hugely varied, and each field comes with its own success stories.

Ride-sharing company Ola has a network of more than 10 million vehicles in 169 cities. It started expanding internationally in 2018, starting with Australia and New Zealand. Uber India is hot on its tail though, adapting its service to allow cash payments.

Education brand BYJU’S has 2.4 million subscribers, making it India’s biggest app for school-age users. It’s also one of the fastest-growing edtech companies worldwide. One-third of Indians are under 20, so schools and colleges face strong demand. Edtech is showing that it can supplement traditional learning.

Pine Labs offers e-commerce payment solutions. Used by more than 100,000 merchants, it powers 3.5 million POS terminals across 3,700 towns and cities. Around 40% of India’s population and 90% of small businesses don’t have bank accounts. Plugging these huge gaps are critical to India’s economic development.

Whatever field you’re in, don’t be afraid to innovate – success could draw huge numbers to your brand.

FINAL THOUGHTS

E-commerce in India is as complex as it is huge – and government regulations continue to evolve. Start small by opening your e-commerce store in specific cities, then expand incrementally. It’ll put you in the best position to take advantage of the country’s huge potential.

Want help launching your brand on the Indian subcontinent? We’d love to help – check out our digital marketing services and get in touch.

Photo by Roan Lavery on Unsplash